Third Circuit Rules That Johnson Controls Did Not Promise Lifetime Health Benefits

Wednesday, August 2, 2017

The Third Circuit rejected a claim for lifetime health insurance benefits filed by retired employees of Johnson Controls, finding that the clear and unambiguous language of the CBAs and group insurance booklets did not guarantee lifetime health insurance benefits. The suit was filed after the group insurance booklets, which were incorporated into and subject to the CBAs, were modified to add lifetime caps. The Court held that, prior to the change, health insurance benefits for the two groups of retirees at issue were promised only for the duration of the relevant CBAs. For the first group of retirees, the insurance booklets provided that benefits would continue in retirement, but the booklets were incorporated into CBAs that contained durational clauses. The Court also stated that such contractual obligations would ordinarily end in any event upon termination of the bargaining agreement. The insurance booklets for the second group of retirees provided that their benefits would continue until death, but the Court held that, when considered in conjunction with the booklets’ reservation of rights provisions and the durational language in the CBAs, this language provided coverage for eligible retirees only for the term of the CBA, and thus were not a guarantee of lifetime benefits. The case is Grove v. Johnson Controls, Inc., No. 16-2178, 2017 WL 2590762 (3d Cir. June 15, 2017).

Madeline C. Rea is an Associate in the New Orleans office and a member of the Labor & Employment Law Department. She works on a variety of litigation matters and has experience in research, motions, depositions, and discovery. She also represents financial institutions and counsels business entities.

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